BILL NUMBER: SB 1300	CHAPTERED  09/27/00

	CHAPTER   729
	FILED WITH SECRETARY OF STATE   SEPTEMBER 27, 2000
	APPROVED BY GOVERNOR   SEPTEMBER 25, 2000
	PASSED THE SENATE   AUGUST 31, 2000
	PASSED THE ASSEMBLY   AUGUST 30, 2000
	AMENDED IN ASSEMBLY   AUGUST 29, 2000
	AMENDED IN ASSEMBLY   AUGUST 18, 2000
	AMENDED IN ASSEMBLY   AUGUST 7, 2000
	AMENDED IN ASSEMBLY   JUNE 16, 1999

INTRODUCED BY   Senator Sher

                        MARCH 2, 1999

   An act to amend Sections 39607, 39607.5, 40002, 40100.5, 40709,
40714.5, 40727.2, 40728.5, 40910, 40914, 40925, 40980, 41954, and
44287 of, and to add Section 40962.5 to, the Health and Safety Code,
relating to air pollution.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 1300, Sher.  Air pollution.
   (1) Existing law requires the State Air Resources Board to
inventory sources of air pollution within the air basins of the state
and determine the kinds and quantity of air pollutants, including
the contribution of natural sources, as specified.
   This bill would require the inventory to also include the
contribution of mobile sources and area sources of emissions, as
specified.
   (2) Existing law required the  state board, not later than June
30, 1997, to develop, and adopt in a public hearing, a methodology
for use by air pollution control districts and air quality management
districts to calculate the value of credits issued for emission
reductions from stationary, mobile, indirect, and areawide sources,
as provided.  Existing law requires the state board to periodically
update the methodology as it applies to future transactions.
   This bill would also require the state board to periodically
review each district's emission reduction and credit trading programs
to ensure that the programs comply with the methodology.  The bill
would require the state board to annually prepare and submit a report
to the Legislature and the Governor that summarizes the actions
taken by the state board to implement those provisions.
   (3) Existing law provides for the establishment of county air
pollution control districts, and requires that a county district be
established in every county, unless the entire county is included
within the Antelope Valley Air Quality Management District, the Bay
Area Air Quality Management District, the Mojave Desert Air Quality
Management District, the South Coast Air Quality Management District,
the San Joaquin Valley Air Quality Management District, if that
district is created, a regional district, or a unified district.
   This bill would add the Sacramento Metropolitan Air Quality
Management District to the list of districts set forth above.
   (4) Existing law establishes procedures for the selection of
members of the governing boards of county air pollution control
districts.  Existing law requires that the members of the governing
boards who are mayors or city council members be selected by the city
selection committee and that the members of governing boards who are
county supervisors be selected by the county.
   This bill would further require that, in a county district where
the county and cities have agreed that each city shall be represented
on the board, each city shall select its own representative.
   (5) Existing law requires every district board to establish a
system by which all reductions in the emission of air contaminants
that are to be used to offset certain future increases in the
emission of air contaminants shall be banked prior to use to offset
future increases in emissions.
   This bill would exempt any district from that requirement that is
not required to prepare and submit a plan for the attainment of state
ambient air quality standards if specified conditions apply to that
district.  The bill would also exempt those districts from a
requirement that a district grant emission reduction credits without
any discount or reduction in the quantity of the emissions reduced at
the source.
   (6) Existing law requires a district to prepare a written analysis
in making prescribed findings.  Existing law authorizes a district
to comply with the requirement for an analysis by preparing an
alternative analysis demonstrating that the proposed new or amended
rule or regulation does not impose a new emission limit or standard,
make an existing emission limit or standard more stringent, or impose
new or more stringent monitoring, reporting, or recordkeeping
requirements, or that the proposed new or amended rule or regulation
is a verbatim adoption or incorporation by reference of a prescribed
standard or measure.
   This bill, instead, would authorize a district to comply with the
requirement for an analysis by finding that the proposed new or
amended rule or regulation falls within one of the categories
specified above.
   (7) Existing law requires that, whenever a district intends to
propose the adoption, amendment, or repeal of a rule or regulation
that will significantly affect air quality or emissions limitations,
the district, to the extent data are available, shall perform an
assessment of the socioeconomic impacts, as defined, of the adoption,
amendment, or repeal of the rule or regulation.
   This bill would provide that, to the extent that information on
the socioeconomic impact of a regulation is required to be developed
by a district pursuant to other specified law, that information may
be used or referenced in the assessment.
   (8) Existing law requires reductions in emissions to be calculated
with respect to the actual level of emissions that existed in each
district during 1990, as determined by the state board.  Existing law
also required reductions in emissions occurring after December 31,
1990, including, but not limited to, reductions in emissions
resulting from measures adopted prior to December 31, 1990, to be
included in this calculation.
   This bill would limit the scope of this provision to each district
that is designated nonattainment for a state ambient air quality
standard but is designated attainment for the federal air quality
standard for the same pollutant.  The bill would also specify the
procedure for calculating reductions in emissions for each district
that is designated nonattainment for both state and federal ambient
air quality standards for a single pollutant.
   (9) Existing law requires a district to review and revise its
attainment plan every 3 years to, among other things, incorporate
specified new data or projections into the plan relating to emission
reductions.
   This bill would revise and expand the data and projection
requirements, as provided.  Because this provision would add to the
duties of air pollution control districts, it would constitute a
state-mandated local program.
   (10) Existing law establishes a procedure for the selection of the
membership of the governing board of the Sacramento Metropolitan Air
Quality Management District.
   This bill would add to that procedure provisions relating to
appointments to the governing board to represent a single city within
the district.  The bill would also provide that specified provisions
relating to the appointment and compensation of officers and
employees of county districts shall not be applicable to the
Sacramento district.
   (11) Existing law requires the state board to adopt additional
performance standards to ensure that systems for the control of
gasoline vapors resulting from motor vehicle fueling operations do
not cause excessive gasoline liquid spillage when used in a proper
manner.  Existing law also requires the state board to adopt
procedures for determining the compliance of any system designed for
the control of gasoline vapor emissions during gasoline marketing
operations, as specified, and provides for the certification of
gasoline vapor control systems that meet prescribed requirements.
   This bill would additionally provide that the state board shall
adopt performance standards to prevent excessive evaporative
emissions from liquid retained in the dispensing nozzle or vapor
return hose between refueling events, and certify only those gasoline
vapor control systems that meet specified requirements.
   (12) The existing Carl Moyer Memorial Air Standards Attainment
Program authorizes the state board to make grants for the purchase of
low-emission, heavy-duty engines for vehicles, equipment, vessels,
and locomotives.  Existing law allows the administration of the
program to be delegated to air pollution control districts and air
quality management districts, and requires the state board to reserve
funds for any district that adopts an eligible program, and that
offers matching funds at a specified ratio.
   This bill would allow the state board to adjust the ratio of
matching funds required from a district, if it determines that an
adjustment is necessary in order to maximize the use of, or the air
quality benefits provided by, the program.
  (13) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state.  Statutory provisions establish procedures for making that
reimbursement, including the creation of a State Mandates Claims Fund
to pay the costs of mandates that do not exceed $1,000,000 statewide
and other procedures for claims whose statewide costs exceed
$1,000,000.
   This bill would provide that with regard to certain mandates no
reimbursement is required by this act for a specified reason.
   With regard to any other mandate, this bill would provide that, if
the commission on state mandates determines that the bill contains
costs so mandated by the state, reimbursement for those costs shall
be made pursuant to those statutory provisions.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 39607 of the Health and Safety Code is amended
to read:
   39607.  The state board shall:
   (a) Establish a program to secure data on air quality in each air
basin established by the state board.
   (b) Inventory sources of air pollution within the air basins of
the state and determine the kinds and quantity of air pollutants,
including, but not necessarily limited to, the contribution of
natural sources, mobile sources, and area sources of emissions,
including a separate identification of those sources not subject to
district permit requirements, to the extent feasible and necessary to
carry out the purposes of this chapter.  The state board shall use,
to the fullest extent, the data of local agencies and other state and
federal agencies in fulfilling this purpose.
   (c) Monitor air pollutants in cooperation with districts and with
other agencies to fulfill the purpose of this division.
   (d) Adopt test procedures to measure compliance with its
nonvehicular emission standards and those of districts.
   (e) Establish and periodically review criteria for designating an
air basin attainment or nonattainment for any state ambient air
quality standard set forth in Section 70200 of Title 17 of the
California Code of Regulations.  In developing and reviewing these
criteria, the state board shall consider instances where there is
poor or limited ambient air quality data, and shall consider highly
irregular or infrequent violations.  The state board shall provide an
opportunity for public comment on the proposed criteria, and shall
adopt the criteria after a public hearing.
   (f) Evaluate, in consultation with the districts and other
interested parties, air quality-related indicators which may be used
to measure or estimate progress in the attainment of state standards
and establish a list of approved indicators.  On or before July 1,
1993, the state board shall identify one or more air quality
indicators to be used by districts in assessing progress as required
by subdivision (b) of Section 40924.  The state board shall continue
to evaluate the prospective application of air quality indicators
and, upon a finding that adequate air quality modeling capability
exists, shall identify one or more indicators which may be used by
districts in lieu of the annual emission reductions mandated by
subdivision (a) of Section 40914.  In no case shall any indicator be
less stringent or less protective, on the basis of overall health
protection, than the annual emission reduction requirement in
subdivision (a) of Section 40914.
   (g) Establish, not later than July 1, 1996, a uniform methodology
which may be used by districts in assessing population exposure,
including, but not limited to, reduction in exposure of districtwide
subpopulations such as children, the elderly, and persons with
respiratory disease, to ambient air pollutants at levels above the
state ambient air quality standards, for estimating reductions in
population exposure for the purposes of Sections 40913, 40924, and
41503, and for the establishment of the means by which reductions in
population exposures may be achieved.  The methodology adopted
pursuant to this subdivision shall be consistent with the federal
Clean Air Act (42 U.S.C. Sec. 7401 et seq.), and with this division,
including, but not limited to, Section 39610.
  SEC. 2.  Section 39607.5 of the Health and Safety Code is amended
to read:
   39607.5.  (a) The state board shall develop, and adopt in a public
hearing a methodology for use by districts to calculate the value of
credits issued for emission reductions from stationary, mobile,
indirect, and areawide sources, including those issued under
market-based incentive programs, when those credits are used
interchangeably.
   (b) In developing the methodology, the state board shall do all of
the following:
   (1) Ensure that the methodology results in the maintenance and
improvement of air quality consistent with this division.
   (2) Allow those credits to be used in a market-based incentive
program adopted pursuant to Section 39616 that requires annual
reductions in emissions through declining annual allocations, and
allow the use of all of those credits, including those from a
market-based incentive program, to meet other stationary or mobile
source requirements that do not expressly prohibit that use.
   (3) Ensure that the methodology does not do any of the following:

   (A) Result in the crediting of air emissions that already have
been identified as emission reductions necessary to achieve state and
federal ambient air quality standards.
   (B) Provide for an additional discount of credits solely as a
result of emission reduction credits trading if a district already
has discounted the credit as part of its process of identifying and
granting those credits to sources.
   (C) Otherwise provide for double-counting emission reductions.
   (4) Consult with, and consider the suggestions of, the public and
all interested parties, including, but not limited to, the California
Air Pollution Control Officers Association and all affected
regulated entities.
   (5) Ensure that any credits, whether they are derived from
stationary, mobile, indirect, or areawide sources, shall be
permanent, enforceable, quantifiable, and surplus.
   (6) Ensure that any credits derived from a market-based incentive
program adopted pursuant to Section 39616 are permanent, enforceable,
quantifiable, and are in addition to any required controls, unless
those credits otherwise comply with paragraph (2).
   (7) Consider all of the following factors:
   (A) How long credits should be valid.
   (B) Whether, and which, banking opportunities may exist for
credits.
   (C) How to provide flexibility to sources seeking to use credits
so that they remain interchangeable and negotiable until used.
   (D) How to ensure a viable trading process for sources wishing to
trade credits consistent with this section.
   (E) How to ensure that, if credits may be used within and between
adjacent districts or air basins where sources are in proximity to
one another, the use occurs while maintaining and improving air
quality in both districts or air basins.
   (c) If necessary, the state board shall periodically update the
methodology as it applies to future transactions.
   (d) The state board shall periodically review each district's
emission reduction and credit trading programs to ensure that the
programs comply with the methodology developed pursuant to this
section.
   (e) The state board shall annually prepare and submit a report to
the Legislature and the Governor that summarizes the actions taken by
the state board to implement this section.
  SEC. 3.  Section 40002 of the Health and Safety Code is amended to
read:
   40002.  (a) There is continued in existence and shall be, in every
county, a county district, unless the entire county is included
within the Antelope Valley district, the bay district, the Mojave
Desert district, the south coast district, the Sacramento
Metropolitan Air Quality Management District, the San Joaquin Valley
Air Quality Management District, if that district is created, a
regional district, or a unified district.
   (b) If only a part of the county is included within the Antelope
Valley district, the bay district, the south coast district, the
Mojave Desert district, the San Joaquin Valley Air Quality Management
District, if that district is created, a regional district, or a
unified district, there is in that part of the county not included
within any of those districts a county district, for which different
air quality rules and regulations may be required.
  SEC. 4.  Section 40100.5 of the Health and Safety Code is amended
to read:
   40100.5.  (a) The membership of the governing board of each county
district shall include (1) one or more members who are mayors, city
council members, or both, and (2) one or more members who are county
supervisors.
   (b) The number of those members and their composition shall be
determined jointly by the county and the cities within the district,
and shall be approved by the county, and by a majority of the cities
which contain a majority of the population in the incorporated area
of the district.
   (c) The governing board shall reflect, to the extent feasible and
practicable, the geographic diversity of the district and the
variation of population between the cities in the district.
   (d) The members of the governing board who are mayors or city
council members shall be selected by the city selection committee.
In districts where the county and the cities have agreed that each
city shall be represented on the governing board, each city shall
select its own representative to the governing board.  The members of
the governing board who are county supervisors shall be selected by
the county.
   (e) This section does not apply to any district in which the
population of the incorporated area of the county is 35 percent or
less of the total county population, as determined by the district on
June 30, 1994, or to a county district having a population of more
than 2,500,000 as of June 30, 1990.
   (f) If a district fails to comply with subdivisions (a) and (b),
the membership of the governing board shall be determined as follows:

   (1) In districts in which the population in the incorporated areas
represents between 36 and 50 percent of the total county population,
one-third of the members of the governing board shall be mayors or
city council members, and two-thirds shall be county supervisors.
   (2) In districts in which the population in the incorporated areas
represents more than 50 percent of the total county population,
one-half of the members of the governing board shall be mayors or
city council members, and one-half shall be county supervisors.
   (3) The number of those members shall be determined as provided in
subdivision (b), and the members shall be selected pursuant to
subdivision (d).
   (4) For purposes of paragraphs (1) and (2), if any number which is
not a whole number results from the application of the term
"one-third," "one-half," or "two-thirds," the number of county
supervisors shall be increased to the nearest integer, and the number
of mayors or city council members decreased to the nearest integer.

  SEC. 5.  Section 40709 of the Health and Safety Code is amended to
read:
   40709.  (a) Every district board shall establish by regulation a
system by which all reductions in the emission of air contaminants
that are to be used to offset certain future increases in the
emission of air contaminants shall be banked prior to use to offset
future increases in emissions.  The system shall provide that only
those reductions in the emission of air contaminants that are not
otherwise required by any federal, state, or district law, rule,
order, permit, or regulation shall be registered, certified, or
otherwise approved by the district air pollution control officer
before they may be banked and used to offset future increases in the
emission of air contaminants.  The system shall be subject to
disapproval by the state board pursuant to Chapter 1 (commencing with
Section 41500) of Part 4 within 60 days after adoption by the
district.
   (b) The system is not intended to recognize any preexisting right
to emit air contaminants, but to provide a mechanism for districts to
recognize the existence of reductions of air contaminants that can
be used as offsets, and to provide greater certainty that the offsets
shall be available for emitting industries.
   (c) Notwithstanding subdivision (a), emissions reductions proposed
to offset simultaneous emissions increases within the same
stationary source need not be banked prior to use as offsets, if
those reductions satisfy all criteria established by regulation
pursuant to subdivision (a).
   (d) This section does not apply to any district that is not
required to prepare and submit a plan for attainment of state ambient
air quality standards pursuant to Section 40911 if both of the
following apply to the district:
   (1) The district is not in a federal nonattainment area for any
national ambient air quality standard unless the sole reason for the
nonattainment is due to air pollutant transport.
   (2) An owner or operator of a source or proposed source has not
petitioned the district to establish a banking system.
  SEC. 6.  Section 40714.5 of the Health and Safety Code is amended
to read:
   40714.5.  (a) The Legislature hereby finds and declares all of the
following:
   (1) Because of policy considerations, certain sources of air
pollution are exempt from district permitting requirements or are not
otherwise controlled by districts.
   (2) Emissions from some of these sources can be reduced through
cost-effective measures, thereby creating additional emission
reduction credits.
   (3) An increased supply of emission reduction credits is
beneficial to local economies.
   (4) The purpose of this section is to provide an incentive to
generate additional and fully valued emission reduction credits by
encouraging emission reductions from these sources without subjecting
them to a district permitting process.
   (b) (1) With respect to any emission reduction that occurs on or
after January 1, 1991, at a source that was and remains exempt from
district rules and regulations, the district shall grant emission
reduction credits or marketable trading credits without any discount
or reduction in the quantity of the emissions reduced at the source
unless otherwise provided by law.  Emission reduction credits or
marketable trading credits issued by the district for those exempt
sources may be reduced only when applied to the permitting of other
stationary sources as a result of new source review, or in accordance
with any applicable requirement of a marketable trading credit
program.
   (2) Any credits issued by a district pursuant to this subdivision
shall meet all of the requirements of state and federal law,
including, but not limited to, all of the following requirements:
   (A) The credits shall not result in the crediting of air emissions
which are already contemporaneously required by an emission control
measure in a plan necessary to achieve state and federal ambient air
standards.
   (B) The credits shall not provide for an additional discount of
credits solely as a result of emission reduction credits trading if a
district has already discounted the credit as part of its process of
identifying and granting those credits to sources.
   (C) The credits shall not, in any manner, result in
double-counting of emission reductions.
   (D) The credits shall be permanent, enforceable, quantifiable, and
surplus.
   (3) This subdivision applies statewide in any area not otherwise
excluded under subdivision (d) of Section 40709.
  SEC. 7.  Section 40727.2 of the Health and Safety Code is amended
to read:
   40727.2.  (a) In complying with Section 40727, the district shall
prepare a written analysis as required by this section.  In the
analysis, the district shall identify all existing federal air
pollution control requirements, including, but not limited to,
emission control standards constituting best available control
technology for new or modified equipment, that apply to the same
equipment or source type as the rule or regulation proposed for
adoption or modification by the district.  The analysis shall also
identify any of that district's existing or proposed rules and
regulations that apply to the same equipment or source type, and all
air pollution control requirements and guidelines that apply to the
same equipment or source type and of which the district has been
informed pursuant to subdivision (b).  The analysis shall be in a
format that minimizes paperwork and, at the option of the district,
may be in matrix form.
   (b) Within 60 days from the date of a district's publication,
pursuant to Section 40923, of the list of regulatory measures
proposed for adoption in the following year, any person may inform
the district of any existing federal or state air pollution control
requirement or guideline or proposed or existing district air
pollution control requirement or guideline that applies to the same
type of source or equipment in that district as any proposed new or
amended district rule or regulation on that district's list of
regulatory measures.  If any person informs the district of any
requirement or guideline that does not apply to the same type of
source or equipment, the district shall notify the person to that
effect and shall not be required to review that requirement or
guideline.
   (c) The analysis prepared pursuant to subdivision (a) shall
compare the elements of each of the identified air pollution control
requirements to the corresponding element or elements of the district'
s proposed new or amended rule or regulation.
   (d) Air pollution control requirement elements to be reviewed
pursuant to subdivision (c) are all of the following:
   (1) Averaging provisions, units, and any other pertinent
provisions associated with emission limits.
   (2) Operating parameters and work practice requirements.
   (3) Monitoring, reporting, and recordkeeping requirements,
including test methods, format, content, and frequency.
   (4) Any other element that the district determines warrants
review.
   (e) If one or more elements of a district's proposed new or
amended rule or regulation differs from corresponding elements of any
existing air pollution control requirement or guideline applicable
to the same equipment or source type, the analysis prepared pursuant
to subdivision (a) shall note the difference or differences.
   (f) The public hearing notice given to the state board pursuant to
subdivision (b) of Section 40725, and any notice mailed to
interested persons, shall include a statement indicating that the
analysis required by this section has been prepared, and shall
provide the name, address, and telephone number of a district officer
from whom copies may be requested.  The analysis required by this
section shall be provided to the public upon request.
   (g) If a district's proposed new or amended rule or regulation
does not impose a new emission limit or standard, make an existing
emission limit or standard more stringent, or impose new or more
stringent monitoring, reporting, or recordkeeping requirements, or if
the proposed new or amended rule or regulation is a verbatim
adoption or incorporation by reference of a federal New Source
Performance Standard adopted pursuant to Section 111 of the federal
Clean Air Act (42 U.S.C. Sec. 7411) or an airborne toxic control
measure established by the state board pursuant to Section 39658, a
district may elect to comply with subdivision (a) by finding that the
proposed new or amended rule or regulation falls within one or more
of the categories specified in this subdivision.
   (h) Nothing in this section limits the existing authority of
districts to determine the form, content, and stringency of their
rules and regulations.  In implementing this section, it is the
intent of the Legislature that the districts retain their existing
authority and flexibility to tailor their air pollution emission
control requirements to local circumstances.
   (i) For purposes of this section, a district rule or regulation
shall be considered "proposed" if the rule or regulation has been
made available to the general public in connection with a request for
comments.
   (j) To the extent that the district board determines that there
are additional costs imposed by this section, the district board
shall recover those additional costs through the imposition of fees
on regulated entities.
  SEC. 8.  Section 40728.5 of the Health and Safety Code is amended
to read:
   40728.5.  (a) Whenever a district intends to propose the adoption,
amendment, or repeal of a rule or regulation that will significantly
affect air quality or emissions limitations, that agency shall, to
the extent data are available, perform an assessment of the
socioeconomic impacts of the adoption, amendment, or repeal of the
rule or regulation.  The district board shall actively consider the
socioeconomic impact of regulations and make a good faith effort to
minimize adverse socioeconomic impacts, as defined below.  This
section does not apply to the adoption, amendment, or repeal of any
rule or regulation that results in any less restrictive emissions
limit if the action does not interfere with the district's adopted
plan to attain ambient air quality standards, or does not result in
any significant increase in emissions.
   (b) For purposes of this section, "socioeconomic impact" means the
following:
   (1) The type of industries or business, including small business,
affected by the rule or regulation.
   (2) The impact of the rule or regulation on employment and the
economy of the region affected by the adoption of the rule or
regulation.
   (3) The range of probable costs, including costs to industry or
business, including small business, of the rule or regulation.
   (4) The availability and cost-effectiveness of alternatives to the
rule or regulation being proposed or amended.
   (5) The emission reduction potential of the rule or regulation.
   (6) The necessity of adopting, amending, or repealing the rule or
regulation to attain state and federal ambient air standards pursuant
to Chapter 10 (commencing with Section 40910).
   (c) To the extent that information on the socioeconomic impact of
a regulation is required to be developed by a district pursuant to
other provisions of this division, that information may be used or
referenced in the assessment in order to comply with the requirements
of this section.
   (d) This section does not apply to any district with a population
of less than 500,000 persons.
   (e) Upon the approval by a majority vote of the district board, a
county district is not required to include the analysis specified in
paragraphs (2) and (4) of subdivision (b) in any assessment of
socioeconomic impacts for any rule or regulation that only adopts a
requirement that is substantially similar to, or is required by, a
state or federal statute, regulation, or applicable formal guidance
document.  Examples of state or federal formal guidance documents
include, but are not limited to, federal Control Techniques
Guidelines, state and federal reasonably available control technology
determinations, state best available retrofit control technology
determinations, and state air toxic control measures.
  SEC. 9.  Section 40910 of the Health and Safety Code is amended to
read:
   40910.  It is the intent of the Legislature in enacting this
chapter that districts shall endeavor to achieve and maintain state
ambient air quality standards for ozone, carbon monoxide, sulfur
dioxide, and nitrogen dioxide by the earliest practicable date.  In
developing attainment plans and regulations to achieve this
objective, districts shall consider the full spectrum of emission
sources and focus particular attention on reducing the emissions from
transportation and areawide emission sources.  Districts shall also
consider the cost-effectiveness of their air quality programs, rules,
regulations, and enforcement practices in  addition to other
relevant factors, and shall strive to achieve the most efficient
methods of air pollution control.  However, priority shall be placed
upon expeditious progress toward the goal of healthful air.  It is
also the intent of the Legislature that redundant work shall be
avoided.
  SEC. 10.  Section 40914 of the Health and Safety Code is amended to
read:
   40914.  (a) Each district plan shall be designed to achieve a
reduction in districtwide emissions of 5 percent or more per year for
each nonattainment pollutant or its precursors, averaged every
consecutive three-year period, unless an alternative measure of
progress is approved pursuant to Section 39607.
   (b) A district may use an alternative emission reduction strategy
which achieves less than an average of 5 percent per year reduction
in districtwide emissions if the district demonstrates to the state
board, and the state board concurs in, either of the following:
   (1) That the alternative emission reduction strategy is equal to
or more effective than districtwide emission reductions in improving
air quality.
   (2) That despite the inclusion of every feasible measure in the
plan, and an expeditious adoption schedule, the district is unable to
achieve at least a 5-percent annual reduction in districtwide
emissions.
   (c) For purposes of this section and Section 41503.1, for each
district that is designated nonattainment for a state ambient air
quality standard but is designated attainment for the federal air
quality standard for the same pollutant, reductions in emissions
shall be calculated with respect to the actual level of emissions
that exist in each district during 1990, as determined by the state
board.  All reductions in emissions occurring after December 31,
1990, including, but not limited to, reductions in emissions
resulting from measures adopted prior to December 31, 1990, shall be
included in this calculation.  For each district that is designated
nonattainment for both state and federal ambient air quality
standards for a single pollutant, reductions in emissions shall be
calculated with respect to the actual level of emissions that exist
in each district during the baseline year used in the state
implementation plan required by the federal Clean Air Act.  All
reductions in emissions occurring after December 31 of the baseline
year, including, but not necessarily limited to, reductions in
emissions resulting from measures adopted prior to December 31 of the
baseline year, shall be included in this calculation.
  SEC. 11.  Section 40925 of the Health and Safety Code is amended to
read:
   40925.  (a) On or before December 31, 1994, and at least once
every three years thereafter, every district shall review and revise
its attainment plan to correct for deficiencies in meeting the
interim measures of progress incorporated into the plan pursuant to
Section 40914, and to incorporate new data or projections into the
plan, including, but not limited to, the quantity of emission
reductions expected from the control measures adopted in the
preceding three-year period and the dates that those emission
reductions will be achieved, and the rates of population-related,
industry-related, and vehicle-related emissions growth actually
experienced in the district and projected for the future.  This data
shall be compared to the rate of emission reductions and growth
projected in the previous triennial plan revision.
                            Upon adoption of each triennial plan
revision at a public hearing, the district board shall submit the
revision to the state board.
   (b) A district may modify the emission reduction strategy or
alternative measure of progress for subsequent years based on this
assessment if the district demonstrates to the state board, and the
state board finds, that the modified strategy is at least as
effective in improving air quality as the strategy which is being
replaced.
   (c) Each district which cannot demonstrate attainment by December
31, 1999, shall prepare and submit a comprehensive update of its plan
to the state board not later than December 31, 1997, unless the
state board determines, by not later than February 1, 1997, that a
comprehensive plan update is unnecessary.  The revised plan shall
include an interim air quality improvement goal or an equivalent
emission reduction strategy, subject to review and approval by the
state board, to be achieved in the subsequent five-year period.
  SEC. 12.  Section 40962.5 is added to the Health and Safety Code,
to read:
   40962.5.  Notwithstanding any other provision of law, as of July
1, 1996, Article 2 (commencing with Section 40120) of Chapter 2 shall
not be applicable to the Sacramento district.
  SEC. 13.  Section 40980 of the Health and Safety Code is amended to
read:
   40980.  (a) The Sacramento district shall, at a minimum, be
governed by a district board composed of the Board of Supervisors of
the County of Sacramento.
   (b) If the County of Placer submits a resolution of inclusion,
pursuant to Section 40963, one or more elected officials from that
county shall be included on the Sacramento district board, pursuant
to agreement between that county and the Sacramento district board.
   (c) (1) On and after July 1, 1994, the membership of the
Sacramento district board shall include (A) one or more members who
are mayors or city council members, or both, and (B) one or more
members who are county supervisors.
   (2) The number of those members and their composition shall be
determined jointly by the counties and cities within the district,
and shall be approved by a majority of the counties, and by a
majority of the cities which contain a majority of the population in
the incorporated area of the district.
   (d) The governing board shall reflect, to the extent feasible and
practicable, the geographic diversity of the district and the
variation of population between the cities in the district.
   (e) (1) The members of the governing board who are mayors or city
council members shall be selected by the city selection committee if
the district only contains one county, or a majority of the cities
within the district if the district contains more than one county.
The members of the governing board who are county supervisors shall
be selected by the county if the district only contains one county or
a majority of counties within the district if the district contains
more than one county.
   (2) Subsequent appointments to represent a single city within the
district on the Sacramento district board shall be made by the city
council of that city at a regularly scheduled city council meeting,
consistent with state notice requirements.
   (3) The city selection committee shall be convened only if there
is to be a change in the board members designated to represent more
than one city.
   (f) (1) If the district fails to comply with subdivision (c),
one-third of the members of the governing board shall be mayors or
city council members, and two-thirds shall be county supervisors.
The number of those members shall be determined as provided in
paragraph (2) of subdivision (c), and the members shall be selected
pursuant to subdivision (e).
   (2) For purposes of paragraph (1), if any number which is not a
whole number results from the application of the term "one-third" or
"two-thirds," the number of county supervisors shall be increased to
the nearest integer, and the number of mayors or city council members
decreased to the nearest integer.
  SEC. 14.  Section 41954 of the Health and Safety Code is amended to
read:
   41954.  (a) The state board shall adopt procedures for determining
the compliance of any system designed for the control of gasoline
vapor emissions during gasoline marketing operations, including
storage and transfer operations, with performance standards that are
reasonable and necessary to achieve or maintain any applicable
ambient air quality standard.
   (b) The state board shall, after a public hearing, adopt
additional performance standards that are reasonable and necessary to
ensure that systems for the control of gasoline vapors resulting
from motor vehicle fueling operations do not cause excessive gasoline
liquid spillage and excessive evaporative emissions from liquid
retained in the dispensing nozzle or vapor return hose between
refueling events, when used in a proper manner.  To the maximum
extent practicable, the additional performance standards shall allow
flexibility in the design of gasoline vapor recovery systems and
their components.
   (c) (1) The state board shall certify, in cooperation with the
districts, only those gasoline vapor control systems that it
determines will meet the following requirements, if properly
installed and maintained:
   (A) The systems will meet the requirements of subdivision (a).
   (B) With respect to any system designed to control gasoline vapors
during vehicle refueling, that system, based on an engineering
evaluation of that system's component qualities, design, and test
performance, can be expected, with a high degree of certainty, to
comply with that system's certification conditions over the warranty
period specified by the board.
   (C) With respect to any system designed to control gasoline vapors
during vehicle refueling, that system shall be compatible with
vehicles equipped with onboard refueling vapor recovery (ORVR)
systems.
   (2) The state board shall enumerate the specifications used for
issuing the certification.  After a system has been certified, if
circumstances beyond the control of the state board cause the system
to no longer meet the required specifications or standards, the state
board shall revoke or modify the certification.
   (d) The state board shall test, or contract for testing, gasoline
vapor control systems for the purpose of determining whether those
systems may be certified.
   (e) The state board shall charge a reasonable fee for
certification, not to exceed its actual costs therefor.  Payment of
the fee shall be a condition of certification.
   (f) No person shall offer for sale, sell, or install any new or
rebuilt gasoline vapor control system, or any component of the
system, unless the system or component has been certified by the
state board and is clearly identified by a permanent identification
of the certified manufacturer or rebuilder.
   (g) (1) Except as authorized by other provisions of law and except
as provided in this subdivision, no district may adopt, after July
1, 1995, stricter procedures or performance standards than those
adopted by the state board pursuant to subdivision (a), and no
district may enforce any of those stricter procedures or performance
standards.
   (2) Any stricter procedures or performance standards shall not
require the retrofitting, removal, or replacement of any existing
system, which is installed and operating in compliance with
applicable requirements, within four years from the effective date of
those procedures or performance standards, except that existing
requirements for retrofitting, removal, or replacement of nozzles
with nozzles containing vapor-check valves may be enforced commencing
July 1, 1998.
   (3) Any stricter procedures or performance standards shall not be
implemented until at least two systems meeting the stricter
performance standards have been certified by the state board.
   (4) If the certification of a gasoline vapor control system, or a
component thereof, is revoked or modified, no district shall require
a currently installed system, or component thereof, to be removed for
a period of four years from the date of revocation or modification.

   (h) No district shall require the use of test procedures for
testing the performance of a gasoline vapor control system unless
those test procedures have been adopted by the state board or have
been determined by the state board to be equivalent to those adopted
by the state board, except that test procedures used by a district
prior to January 1, 1996, may continue to be used until January 1,
1998, without state board approval.
   (i) With respect to those vapor control systems subject to
certification by the state board, there shall be no criminal or civil
proceedings commenced or maintained for failure to comply with any
statute, rule, or regulation requiring a specified vapor recovery
efficiency if the vapor control equipment which has been installed to
comply with applicable vapor recovery requirements meets both of the
following requirements:
   (1) Has been certified by the state board at an efficiency or
emission factor required by applicable statutes, rules, or
regulations.
   (2) Is installed, operated, and maintained in accordance with the
requirements set forth in the document certification and the
instructions of the equipment manufacturer.
  SEC. 15.  Section 44287 of the Health and Safety Code is amended to
read:
   44287.  (a) The state board shall establish grant criteria and
guidelines consistent with this chapter for covered vehicle projects
as soon as practicable, but not later than January 1, 2000.  The
adoption of guidelines is exempt from the rulemaking provisions of
the Administrative Procedure Act, Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code.  The state board shall solicit input and comment from the
districts during the development of the criteria and guidelines and
shall make every effort to develop criteria and guidelines that are
compatible with existing district programs that are also consistent
with this chapter.  Guidelines shall include protocols to calculate
project cost-effectiveness.  The grant criteria and guidelines shall
include safeguards to ensure that the project generates surplus
emissions reductions.  Guidelines shall enable and encourage
districts to cofund projects that provide emissions reductions in
more than one district.  The state board shall make draft criteria
and guidelines available to the public 45 days before final adoption,
and shall hold at least one public meeting to consider public
comments before final adoption.
   (b) The state board, in consultation with the participating
districts, may propose revisions to the criteria and guidelines
established pursuant to subdivision (a) as necessary to improve the
ability of the program to achieve its goals.  A proposed revision
shall be made available to the public 45 days before final adoption
of the revision and the state board shall hold at least one public
meeting to consider public comments before final adoption of the
revision.
   (c) The state board shall reserve funds for, and disburse funds
to, districts from the fund for administration pursuant to this
section and Section 44299.1.
   (d) The state board shall develop guidelines for a district to
follow in applying for the reservation of funds, in accordance with
this chapter.  It is the intent of the Legislature that district
administration of any reserved funds be in accordance with the
project selection criteria specified in Sections 44281, 44282, and
44283 and all other provisions of this chapter.  The guidelines shall
be established and published by the state board as soon as
practicable, but not later than January 1, 2000.
   (e) Funds shall be reserved by the state board for administration
by a district that adopts an eligible program pursuant to this
chapter and offers matching funds at a ratio of one dollar ($1) of
matching funds committed by the district or the Mobile Source Air
Pollution Reduction Review Committee for every two dollars ($2)
committed from the fund.  Funds available to the Mobile Source Air
Pollution Reduction Review Committee may be counted as matching funds
for projects in the South Coast Air Basin only if the committee
approves the use of these funds for matching purposes.  Matching
funds may be any funds under the district's budget authority that are
committed to be expended in accordance with the program.  Funds
committed by a port authority or a local government, in cooperation
with a district, to be expended in accordance with the program may
also be counted as district matching funds.  Matching funds provided
by a port authority or a local government may not exceed 30 percent
of the total required matching funds in any district that applies for
more than three hundred thousand dollars ($300,000) of the state
board funds.  Only a district, or a port authority or a local
government teamed with a district, may provide matching funds.
   (f) The state board may adjust the ratio of matching funds
described in subdivision (e), if it determines that an adjustment is
necessary in order to maximize the use of, or the air quality
benefits provided by, the program, based on a consideration of the
financial resources of the district.
   (g) Notwithstanding subdivision (e), a district need not provide
matching funds for state board funds allocated to the district for
program outreach activities pursuant to paragraph (4) of subdivision
(a) of Section 44299.1.
   (h) A district may include within its matching funds a reasonable
estimate of direct or in-kind costs for assistance in providing
program outreach and application evaluation.  In-kind and direct
matching funds shall not exceed 15 percent of the total matching
funds offered by a district.  A district may also include within its
matching funds any money spent on or after February 25, 1999, that
would have qualified as matching funds but were not previously
claimed as matching funds.
   (i) A district desiring a reservation of funds shall apply to the
state board following the application guidelines established pursuant
to this section.  The state board shall approve or disapprove a
district application not later than 60 days after receipt.  Upon
approval of any district application, the state board shall
simultaneously approve a reservation of funding for that district to
administer.  Reserved funds shall be disbursed to the district so
that funding of a district-approved project is not impeded.
   (j) Notwithstanding any other provision of this chapter, districts
and the Mobile Source Air Pollution Reduction Review Committee shall
not use funds collected pursuant to Section 41081 or Chapter 7
(commencing with Section 44220), or pursuant to Section 9250.11 of
the Vehicle Code, as matching funds to fund a project with stationary
or portable engines, locomotives, or marine vessels.
   (k) Any funds reserved for a district pursuant to this section are
available to the district for a period of not more than two years
from the time of reservation.  Funds not expended by June 30 of the
second calendar year following the date of the reservation shall
revert back to the state board as of that June 30, and shall be
deposited in the Covered Vehicle Account established pursuant to
Section 44299.  The funds may then be redirected based on
applications to the fund.  Regardless of any reversion of funds back
to the state board, the district may continue to request other
reservations of funds for local administration.  Each reservation of
funds shall be accounted for separately, and unused funds from each
application shall revert back to the state board as specified in this
subdivision.
   (l) The state board shall specify a date each year when district
applications are due.  If the eligible applications received in any
year oversubscribe the available funds, the state board shall reserve
funds on an allocation basis, pursuant to subdivision (b) of Section
44299.1.  The state board may accept a district application after
the due date for a period of months specified by the state board.
Funds may be reserved in response to those applications, in
accordance with this chapter, out of funds remaining after the
original reservation of funds for the year.
   (m) Guidelines for a district application shall require
information from an applicant district to the extent necessary to
meet the requirements of this chapter, but shall otherwise minimize
the information required of a district.
   (n) A district application shall be reviewed by the state board
immediately upon receipt.  If the state board determines that an
application is incomplete, the applicant shall be notified within 10
working days with an explanation of what is missing from the
application.  A completed application fulfilling the criteria shall
be approved as soon as practicable, but not later than 60 working
days after receipt.
   (o) The commission, in consultation with the districts, shall
establish project approval criteria and guidelines for infrastructure
projects consistent with Section 44284 as soon as practicable, but
not later than February 15, 2000.  The commission shall make draft
criteria and guidelines available to the public 45 days before final
adoption, and shall hold at least one public meeting to consider
public comments before final adoption.
   (p) The commission, in consultation with the participating
districts, may propose revisions to the criteria and guidelines
established pursuant to subdivision (o) as necessary to improve the
ability of the program to achieve its goals.  A revision may be
proposed at any time, or may be proposed in response to a finding
made in the annual report on the program published by the state board
pursuant to Section 44295.  A proposed revision shall be made
available to the public 45 days before final adoption of the revision
and the commission shall hold at least one public meeting to
consider public comments before final adoption of the revision.
  SEC. 16.  No reimbursement is required by this act pursuant to
Section 6 of Article XIIIB of the California Constitution because a
local agency or school district has the authority to levy service
charges, fees, or assessments sufficient to pay for the program or
level of service mandated by this act, within the meaning of Section
17556 of the Government Code.
  However, notwithstanding Section 17610 of the Government Code, if
the Commission on State Mandates determines that this act contains
costs mandated by the state, reimbursement to local agencies and
school districts for those costs shall be made pursuant to Part 7
(commencing with Section 17500) of Division 4 of Title 2 of the
Government Code.  If the statewide cost of the claim for
reimbursement does not exceed one million dollars ($1,000,000),
reimbursement shall be made from the State Mandates Claims Fund.
